Strategic Housing Market Assessments
Practice Guidance
Version 2
planning
Strategic Housing
Market Assessments
Practice Guidance
Version 2
August 2007
Department for Communities and Local Government:
Department for Communities and Local Government
Eland House
Bressenden Place
London
SW1E 5DU
Telephone: 020 7944 4400
Website: www.communities.gov.uk
© Crown Copyright, 2007
Copyright in the typographical arrangement rests with the Crown.
This publication, excluding logos, may be reproduced free of charge in any format or medium for research, private study or for internal circulation within an organisation. This is subject to it being reproduced accurately and not
used in a misleading context. The material must be acknowledged as Crown copyright and the title of the
publication specified.
Any other use of the contents of this publication would require a copyright licence. Please apply for a Click-Use Licence for core material at www.opsi.gov.uk/click-use/system/online/pLogin.asp, or by writing to the Office of
Public Sector Information, Information Policy Team, St Clements House, 2-16 Colegate, Norwich, NR3 1BQ.
Fax: 01603 723000 or email:
If you require this publication in an alternative format please email
Communities and Local Government Publications
PO Box 236
Wetherby
West Yorkshire
LS23 7NB
Tel: 08701 226 236
Fax: 08701 226 237
Textphone: 08701 207 405
Email:
or online via the Communities and Local Government website: www.communities.gov.uk
August 2007
Product Code: 07HC04789
CONTENTS
Chapter 1 – Introduction
Introduction 7-8
Background 8
Aims and objectives 8-9
Robust and credible assessments 9-11
Content and structure of guidance 11
Chapter 2 – Getting started
Introduction 12
Housing market partnerships 12-13
Setting the research questions 13-16
Use of different methods and data sources 16-17
Chapter 3 – The current housing market
Introduction 18
Stage 1 – The demographic and economic context 18-22
Stage 2 – The housing stock 22-25
Stage 3 – The active market 25-32
Stage 4 – Bringing the evidence together 32-34
Chapter 4 – The future housing market
Introduction 35
Stage 1 – Projecting changes in future numbers of households 35-36
Stage 2 – Future economic performance 36-37
Stage 3 – Future affordability 37-38
Stage 4 – Bringing the evidence together 38
More sophisticated methods of assessing future housing demand 38
Estimating future housing change using forecasting techniques 38-39
Chapter 5 – Housing need
Introduction 40
Definitions 41-43
Stage 1 – Current housing need (gross) 43-45
Stage 2 – Future need 45-47
Stage 3 – Affordable housing supply 47-49
Stage 4 – The housing requirements of households in need 49-51
Stage 5 – Bringing the evidence together 51-53
Chapter 6 – Housing requirements of specific household groups
Introduction 54
Families 54
Older People 55
Minority and hard to reach households 56
Households with specific needs 56-57
Low-cost market housing 57
Intermediate affordable housing 57-58
The requirement for intermediate affordable housing 59-60
Chapter 7 – Monitoring and developing planning for housing policies
Introduction 61
Monitoring and updating stragetic housing market assessments 61-62
Developing planning for housing policies 62
Regional spatial strategies 62
Local development frameworks 62-63
Introduction
CHAPTER 1
Introduction
This practice guidance sets out a framework that local authorities and regional bodies can follow to develop a good understanding of how housing markets operate. It promotes an approach to assessing housing need and demand which can inform the development of local development document and regional spatial strategy planning for housing policies, as set out in Planning Policy Statement 3: Housing[1] (PPS3).
This chapter sets out the rationale behind strategic housing market assessments, including the background to this guidance and its aims and objectives. It goes on to explain how, from a planning policy perspective, local authorities and regions should ensure that assessments are robust and credible.
This guidance will help local authorities and regional bodies to develop a shared evidence base to inform the development of spatial housing policies. In addition, it will help to inform decisions about the policies required in housing strategies. Housing delivery and strategy needs to be responsive to changes in the levels of housing need and demand whilst having regard to the public resources available for housing and other competing areas for investment.
The value of strategic housing market assessments is in assisting policy development, decision-making and resource-allocation processes by:
· enabling regional bodies to develop long-term strategic views of housing need and demand to inform regional spatial strategies and regional housing strategies;
· enabling local authorities to think spatially about the nature and influence of the housing markets in respect to their local area;
· providing robust evidence to inform policies aimed at providing the right mix of housing across the whole housing market – both market and affordable housing;
· providing evidence to inform policies about the level of affordable housing required, including the need for different sizes of affordable housing;
· supporting authorities to develop a strategic approach to housing through consideration of housing need and demand in all housing sectors – owner occupied, private rented and affordable – and assessment of the key drivers and relationships within the housing market;
· drawing together the bulk of the evidence required for local authorities to
appraise strategic housing options including social housing allocation priorities, the role of intermediate housing products, stock renewal, conversion, demolition and transfer; and
· ensuring the most appropriate and cost-effective use of public funds.
Following the definitions set out in PPS3, housing need is defined as ‘the quantity of housing required for households who are unable to access suitable housing without financial assistance’[2] and housing demand as ‘the quantity of housing that households are willing and able to buy or rent’. Housing market areas are ‘geographical areas defined by household demand and preferences for housing. They reflect the key functional linkages between places where people live and work’.
Background
This practice guidance brings together and builds upon the key elements of existing guidance on housing market and housing needs assessment. Key recent guides include:
· Local Housing Needs Assessment: A Guide to Good Practice, DETR, 2000;
· Housing Market Assessment Manual, ODPM, 2004;
· Local Housing Systems Analysis Best Practice Guide, Communities Scotland, 2004; and
· Local Housing Market Assessment Guide, Welsh Assembly Government, 2006.
This guidance replaces the DETR and ODPM good practice guide and manual published in 2000 and 2004 respectively. It should be read in conjunction with the Identifying SubRegional Housing Market Areas Advice Note[3]. A full list of the documents and reports referred to in this guide are set out in Annex F[4].
Aims and objectives
The key objectives of this practice guidance are:
· to provide clear and concise advice for practitioners on how to assess housing need and demand in their areas; and
· to enable local authorities and regions to gain a good appreciation of the characteristics of housing market areas and how they function.
To this end it:
· encourages local authorities to assess housing need and demand in terms of housing market areas. This could involve working with other local authorities in a sub-regional housing market area, through a housing market partnership (see Chapter 2 for more details);
· sets out a framework for assessment that is relevant at the regional, sub-regional and local levels;
· provides a step by step approach to assessing the housing market, housing demand and need;
· focuses upon what to do as a minimum to produce a robust and credible assessment, and explains how local authorities can develop their approach where expertise and resources allow;
· sets out an approach which promotes the use of secondary data where appropriate and feasible, and identifies key data sources at each step of the assessment; and
· considers how local authorities can understand the requirements of specific groups such as families, older and disabled people. Separate guidance is available regarding identifying the accommodation requirements of Gypsy and Traveller communities[5]. The requirements of Gypsies and Travellers should be considered alongside the other household groups identified here.
Robust and credible assessments
Housing markets are dynamic and complex. Because of this, strategic housing market assessments will not provide definitive estimates of housing need, demand and market conditions. However, they can provide valuable insights into how housing markets operate both now and in the future. They should provide a fit for purpose basis upon which to develop planning and housing policies by considering the characteristics of the housing market, how key factors work together and the probable scale of change in future housing need and demand.
Strategic housing market assessments are a crucial aspect of the evidence base in terms of preparing regional spatial strategies, local development documents, regional housing strategies and local housing strategies. From a planning perspective, Planning Policy Statement 12[6] and related guidance[7] emphasise the importance of policies being founded on a thorough understanding of the needs of areas, particularly the opportunities and constraints that exist. They explain that at the earliest stage of preparing local development documents, local planning authorities should gather evidence about their areas, including an understanding of the housing required in their communities. However, as PPS3 explains, strategic housing market assessments are only one of several factors that should be taken into account when determining housing provision figures or the right mix of housing. This point is revisited in detail in Chapter 7.
A robust and credible evidence base is identified by PPS12[8] as being necessary for a plan to be sound. In line with PPS12, for the purposes of the independent examination into the soundness of a Development Plan Document[9], a strategic housing market assessment should be considered robust and credible if, as a minimum, it provides all of the core outputs and meets the requirements of all of the process criteria in figures 1.1 and 1.2. In such circumstances, there is no need for the approach used to be considered at the independent examination. Any discussion at independent examination should focus upon the assessment’s findings and its relationship with the proposed spatial policies for housing set out in the draft submission development plan document.
Figure 1.1: Strategic Housing Market Assessment core outputs(further details are set out in Table 2.1, Chapter 2)
1 / Estimates of current dwellings in terms of size, type, condition, tenure
2 / Analysis of past and current housing market trends, including balance between supply and demand in different housing sectors and price/affordability. Description of key drivers underpinning the housing market
3 / Estimate of total future number of households, broken down by age and type where possible
4 / Estimate of current number of households in housing need
5 / Estimate of future households that will require affordable housing
6 / Estimate of future households requiring market housing
7 / Estimate of the size of affordable housing required
8 / Estimate of household groups who have particular housing requirements eg families, older people, key workers, black and minority ethnic groups, disabled people, young people, etc.
NB. Estimates of household numbers (3, 4, 5 and 6) may be expressed as a number or a range.
Figure 1.2: Strategic Housing Market Assessment process checklist1 / Approach to identifying housing market area(s) is consistent with other approaches to identifying housing market areas within the region
2 / Housing market conditions are assessed within the context of the housing market area
3 / Involves key stakeholders, including house builders
4 / Contains a full technical explanation of the methods employed, with any limitations noted
5 / Assumptions, judgements and findings are fully justified and presented in an open and transparent manner
6 / Uses and reports upon effective quality control mechanisms
7 / Explains how the assessment findings have been monitored and updated (where appropriate) since it was originally undertaken
One of the key aims of the new planning system is to involve local communities and stakeholders from the earliest stages of plan preparation, which includes evidence base work like strategic housing market assessments. This will help to minimise any potential objections to policies proposed, as stakeholders will have had the opportunity to express their concerns during the preparation of the strategic housing market assessment. Any concerns or technical matters that stakeholders or others may have regarding the approach or findings should be raised with housing market partnerships during the assessment process, preferably at an early stage.
Partnerships should seek to address any concerns raised as part of the process of agreeing the methods to be used, the interpretation of the findings and signing off the assessment report. They may wish to consider using independent mediators/third parties should any issues prove particularly contentious. Where partnerships are unable to resolve any issues within a reasonable period of time, any outstanding issues should be presented with the findings of the assessment to the independent examination. In such circumstances, there should be no need to discuss the approach used or any outstanding issues at the examination unless the Inspector considers it necessary as part of considering the assessments findings and proposed spatial policies for housing.
Should local planning authorities, when preparing spatial policies for housing, have any concerns as to whether the findings of the assessment meet the checklists in figures 1.1 and 1.2, they should consider requesting the views of the relevant regional planning body or county councils with relevant expertise. This should be undertaken during the early stages of development plan document preparation. Any advice provided should set out clearly what steps may be required to ensure the assessment is credible and robust linked to the checklists. Authorities should then ensure that any further work required is undertaken before proceeding to develop preferred policy options.
Whether a strategic housing market assessment is based upon secondary or survey data should not be a factor in determining whether an assessment is robust and credible. No one methodological approach or use of a particular dataset(s) will result in a definitive assessment of housing need and demand. The quality of the data used is the important consideration in determining whether an assessment is robust and credible rather than its nature. These issues are discussed in further detail in Chapter 2.